Oil prices jumped Wednesday 21st September 2022 by 3% after President Vladimir Putin hinted Russia is ready to use nuclear force to hold onto its territory in Ukraine. In a televised address, Putin also said Moscow is calling up more troops to join the forces in Ukraine, via a partial mobilization of 300,000 reservists with military experience.
Putin on Wednesday referenced his potential use of nuclear weapons, saying “those who try to blackmail us with nuclear weapons should know that the prevailing winds can turn in their direction.”
He threatened to use “all the means at our disposal” to defend “Russia and our people.”
In response, Brent crude futures, the benchmark for Nigeria’s crude oil, rose 3.07percent to $93.40 per barrel, and West Texas Intermediate futures added 3.13percent to $86.57 per barrel.
“If the territorial integrity of our country is threatened, to defend Russia and our people, we will use all means we have. This is not a bluff,” Putin said in his address to the nation, according to a translation by the BBC.
“The territorial integrity of our motherland, our independence and freedom will be secured, I repeat, with all the means we have.”
The move signifies the biggest escalation of the war in Ukraine since Moscow launched its invasion in late February and is the first of such mobilization by Russia since World War II.
It follows a string of battlefield setbacks for Russian forces, who have been driven away from areas they had captured in northeastern Ukraine by a sweeping counteroffensive conducted by Kyiv’s troops.
The conflict between Russia and Ukraine has impacted international oil markets as Western allies placed sanctions and export prohibitions on Moscow. Brent crude surged above $120 a barrel in early March not long after Russia began its invasion. Market constraints have contributed to an energy crisis in Europe, forcing nations like Germany and France to look for alternate fuel supplies before the winter months. There are concerns that an extended conflict may increase pressure on oil and natural gas supplies. Crude oil prices are also being affected by concerns about how a slowdown in China’s economy may affect demand. Beijing has imposed a number of restrictions and lockdowns to stop the COVID-19 virus from spreading, which has affected businesses. Oil prices could rise to over $150 per barrel, according to JP Morgan, as demand exceeds supply. This is partially due to companies underinvesting in future production, which increases the likelihood of a significant supply shortage in the near future.
The Conflict between Russia and Ukraine has affected oil prices in the global oil market. This news of a potential influx of Russian troops into Ukraine may lead to an extended conflict which experts predict could lead to a further rise in global oil prices. This can affect AGO/MGO prices in the near future.
Source: BusinessDay, Yahoolife
